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Why Don’t People On Low Incomes All Live In The Cheap Bits Of London?

So we’ve established that it’s possible, just about, to live in some of the cheapest bits of London on a low income if there are two of you. So why doesn’t everyone live in those areas and save the state from topping up higher rents with housing benefit?

There’s one very practical reason, as a press spokesman for London Councils, the non-political body representing all of London’s councils, gently pointed out: there isn’t enough housing in, say, Tottenham or Catford for everyone on a low income. 700,000 people in London earn less than the living wage. Lewisham borough has a population of 276,000, Haringey 254,900, not all of whom are exactly crammed into crappy ex-council flats (hello Muswell Hill and Brockley).

Then there’s the Paris problem. The French capital has ended up with many of its low income residents living in the outskirts, the banlieues, a word which in this context carries heavy connotations of poverty and deprivation. We’re of the opinion that one of the great things about London is its mixed communities where everyone muddles through together, something that’s starting to change as the rich take up more of central London and a study of housing benefit claimants shows a movement from inner to outer boroughs.

There are also practical problems associated with this very real move that affect more than just those migrating Londoners. More low-income residents place pressure on local services. We mentioned this to London Assembly Member Tom Copley who immediately suggested school places as one knock-on effect; London Councils brought up health and special educational needs services.

Another extra burden is what used to be council tax benefit paid by central government, now council tax reduction paid by local councils but with a 10% funding cut that councils either have to absorb or pass onto claimants. People on low incomes clustering into particular areas means larger clusters of claimants for council tax benefits, and the borough has to decide whether to take the hit or push it back. Internal London migrations mean councils like Kensington and Chelsea, with reserves of £224m, will have to deal with fewer of these pressures than councils like Tower Hamlets, with reserves of £25.8m.

Certain councils are also feeling the brunt of this movement when it comes to trying to place homeless families. We’ve all seen the stories about people being sent to other cities, and Shelter has created a map to show where people were moved to in 2012. Very few end up in, say Kingston upon Thames, but lots end up in places like Brent and Newham. Which then makes stories like the six families moved from Newham to a hotel in Birmingham fairly inevitable, because the local housing’s already in use.

And the market being the market, if there’s an influx of people looking for cheap properties in a cheap area, that area won’t stay as cheap for long – which affects everyone renting there. A recent report from the Department of Work and Pensions (PDF) interviewed landlords about the impact of housing benefit reforms. The initial hope of the government was that landlords would reduce their rents in response to benefit caps but although around 10% have done so, on what appears to be a case-by-case basis, landlords in London are blithely aware that there is enough demand to allow them to maintain rent levels. One landlord from Barking and Dagenham said:

In the last six or 12 months the rent in the private market has really shot up. To give you an example I’ve got a three bedroomed house, one in Dagenham, it’s £950 a month [on housing benefit]. I can get £1250, £1300 a month now private. So going back to your question, I wouldn’t reduce the rent.

Another in Westminster:

It’s very healthy, there’s no shortage of tenants. I can say that for every one vacancy that we may have at any one time we can easily line up five to 10 tenants, privately or on Housing Benefit.

And a landlord in Hackney:

For landlords I think it’s fantastic, there aren’t enough properties, people can’t afford to buy…there’s too many renters which means that every property is virtually like gold dust which in turn is driving the price of rents up.

Patrick Butler in the Guardian also identified another problem keeping people out of the cheaper, outer boroughs: most of London’s rental properties are in the inner zones. Thinking back to our fictional family on a low income, we had a look at various areas for total numbers of two bedroom flats, at all price points, that Findaproperty.com had available:

Cheap inner London
Willesden 428
Tooting 636
Tottenham 250

Outer London
Gidea Park 49
Bexley 23
Hillingdon 69
Enfield 237

Other inner London
Maida Vale 936
Notting Hill 1227
Kilburn 694

Of course, nobody has a right to live exactly where they want to. But if people have family ties to an area, if they grew up in one part of London but property prices have made it impossible to stay near family and friends (people who may help look after the kids, or may need care themselves), if the kids are in school or someone’s got a regular relationship with health or social workers, then it’s ridiculous that London’s lack of decent, affordable housing means that people can’t stay with their roots. Or are forced to live somewhere they can’t afford, simply because that’s all that’s available.

Without proper tenancy rights and price controls, the greed of the ‘Buy to Let’ sector is intent on driving the rental prices up beyond means too. It is the current governments fervent hope to reignite the escalating house price boom (despite their protestation otherwise) to bolster growth in the UK.

However, the market will reach necessarily have to peak as you cannot push prices for low quality housing beyond the means of those it was intended for. So either you make London a gated community for the rich or you introduce effective protections for tenants on insane rent increases.

But they won’t do that will they? After all those developers vote don’t they? And they’re wealthy (and don’t expect Labour, New or otherwise, to do any different)

BethPH

This is an excellent post and it’s great to see the ‘why can’t all the poor people just go and live somewhere else’ type comments being addressed in a coherent and thoughtful manner.

I think there is a tendency to assume that because of the state of the rental market, all landlords are greedy which isn’t necessarily the case. Some (like the ones quoted above) clearly are, but there are still situations where a home-owner is tied into poor mortgage deals/in negative equity, can’t sell and have to rent their home out.

London House Hound

but Rachel… anyone can live anywhere they choose in London – as long as they are prepared to get a job, work hard and generate the income. A scary thought I know – but it’s that British sense of entitlement to ‘something for nothing’ which drags our country down and keeps it there.
let’s all just get a grip and realise how lucky we are that we live in an economy that – despite the worst recession on record – can still afford handouts to low income families to help them keep a roof over their heads and
let’s stop moaning that they can’t all live in Kensington & Chelsea, Westminster or those another nice parts of central London that working families can only dream of being able to afford….. ever

BethPH

You might want to read yesterday’s post on housing too. It’s very much an over-simplification that low income families are living in expensive areas with any kind of sense of entitlement.

rob22t

Unfortunatly we have the situation were people who don’t want to work (yes there are lots) get given houses over the people who do work and what more they think its their right that the state pay for them.

Agreed this is caused by a lack of housing. This only helps the poor and the super rich, the middle class of London are being shafted.

Koola

A simplistic viewpoint (presumably representign the views of someone with property investment interests in inner london). Consider that many parts of inner London that are now ridiculously expensive were once solid working-class communities (even in Kensington & Chelsea), and other previously rough and grotty parts, such as the East End, are rapidly becoming fashionable, pricing out the communities that have always lived there.
Why should real Londoners whose families have been there for generations be forced to move because they aren’t wealthy, just because there is an influx of rich foreigners and aspirational hipsters? It’s not healthy to have a city so segregated by class and income, just look at Paris.

sam

Interesting article. What I don’t understand is: “The initial hope of the government was that landlords would reduce their rents in response to benefit caps” – WHY?

Private landlords have taken their own risks to acquire their property (the tools of their business) why is it wrong to take a profit – i.e. run a successful business?

Jamie Bale

Housing should not be a business. It should be a home. That is what is wrong with private landlords. My partner and I earn over £80k between us yet cannot afford a deposit even to live in London and remain in a reasonable area that is commutable to both of our jobs.

SG

If you’re poor, or even not on great wages, but without children, then for at least a decade (really its increasingly since the 90s) you’ve been faced with depressing and expensive hour long plus commutes each way to work. There is the option of slumming with others, for example sharing a living room with twin beds, which quite a few immigrants do, but that is only tolerable if doing it temporarily while saving to return home where the cash you’ve scrapped by and saved goes much further. Permanent UK residents have no such light at the end of the tunnel in London right now.

rob22t

More houses need to be built.
Rent needs to be controlled or a buy to let tax introduced.
More jobs need to be created in other parts of the country.
Controlled immigration needs to be introduced.

Tina Gray

It was not so long ago that most people living in London were the poorest who could not afford to move to the suburbs or further more scenic places forming the counties of England. I have lived in Southwark all my life & remember when the docks were full of boats being loaded and unloaded and not accesible to the general public due to being dangerou, no one wanted to live here back then, only us Southwark familiies loved the community, and the rest of the England looked down their noses at us…especially us who live in Bermondsey. Then the docks shut down Remaining empty for years before being redeveloped, apartments costing a small fortune, marinas with private boats, new shopping centres, schools sprang up for the new Southwark residents who could not wait to live here in the redeveloped,up and coming Southwark docklands. The docks became the best places to live in London which were soonsold and filled with the wealthy newbies, we who had always lived here on council estates were now looking at these people with priviliged housing, 2 cars per family, dockside apartments, private boat on the marina…and we saw total injustice ( we still do , although the majority of us have long since seeing red and now have friends and family alsoi living the high life which Southwark has to offer. Bermondsey is now ton the list of ” best places to live in London”, which makes us all laugh, who would have evr thought that the wealthy would ever want to have anything to do with any of us let alone live here…on the doorstep of Millwall FC lol

Jackie Mackay

There are plenty of empty flats that the owner wants to do up but….. you join the dots. Some people would love to do the flat up – to agreed standards and taste for a consideration on the rent in a simple written agreement. It would help get those flats ready to go. It allows the person living there the dignity to enjoy their own created environments.

Many landlords know the good value and easier times when they have a good tenant. I know several people who have kept their rents low by taking a pride in the place.

So there is something that can be done by all of us when people are kindly and friendly to each other. It puts heart back to know that not everybody is trying to screw his fellow man, When I go out I invariably run in to someone else. It’s the people around us that make the neighbourhood what it is.

Richard

For me the real question is ‘Why don’t people on low / no incomes live in the cheap bits of Britain or the world?’ If we had more labour mobility and scrapped the minimum wage then we could have areas of Britain with a ready pool of cheap workers … very attractive for labour intensive industry – the sort of thing that we currently expect China to do for us.

It is the chattering classes who feed the idea that people should be entitled to live where their parents did. It is the chattering classes who feel sorry for the ‘poor’ and, with good intentions, feed their addiction to benefits. If you really want to help the people of this country stop chattering, stop trying to fiddle with the economy, and go and set up a factory in Yorkshire. Let’s get Britain working again.

Alex Wright

Part of the reason why many cheaper parts are so cheap (e.g. Middlesborough) is that there are very few jobs there, and therefore less rental demand.

Are you telling people who can barely afford their rent to somehow get the capital to set up a factory in Yorkshire? And how could they compete with Far Eastern wages and still pay their workers enough to be able to eat?

Alex Wright

The other issue is the crazily expensive peak tube fares. From what I can gather, the cheapest rooms (not even talking flats) are c £450 a month – and very hard to find – in the furthest out zones.

But if you had to commute to Central London you’d be shelling out over £200 a month, so rent + tube would be over 60% of a net full time minimum wage of just over £900.

If your bills and council tax were included in your rent, just about doable if you don’t have – say – kids to care for. But not really affordable by any usual definition of the term.

Plus that £650 figure is the same as a couple I know pay for a room in an ex council flat in Bethnal Green (Zone 2) – but they can at least cycle to Central London, the guy saves on bus/tube fares by walking 40 minutes to work, the girl sparingly uses the tube and bus at off-peak times.